Real estate privately (box 3) vs. via BV (Vpb)
| Aspect | Privately (box 3) | Via BV (Vpb) |
|---|---|---|
| Annual tax on value | Box 3: 36% on deemed return (6% on investments) | Vpb: 19% on actual rental income and gains |
| Tax on rental income | Included in box 3 (actual return) | Vpb 19% on net rental income |
| Tax on value gain | Box 3 (actual return) | Vpb on gain when sold |
| Transfer tax (overdrachtsbelasting) | 10.4% (investment) | 10.4% (investment) |
| Mortgage interest deductible | Limited in box 3 | Yes, as BV cost |
Buying in the BV: key consideration
Once real estate is in a BV, extracting it (selling to yourself or to a third party) triggers corporate tax and then box 2 tax. Never put a property in a BV unless you are confident it should stay there long-term. The transaction costs in and out are significant.
When a real estate BV makes sense
- Portfolio of 5+ properties where the management is a genuine business
- Commercial real estate held by the operating company for business use
- Real estate development (buy, renovate, sell) — active business in BV
- When combined with a holding to enable participation exemption on sale
The transfer tax problem
Transferring existing privately-owned real estate to a BV costs 10.4% transfer tax on the market value. This is a significant one-time cost that makes the switch financially unattractive for most individual properties. Buy new real estate directly via the BV rather than transferring existing property.